Catholic Church accused of multibillion-dollar job rort

By Linton Besser

THE Catholic Church's employment arm has been systematically rorting the taxpayer-funded welfare-to-work program, defrauding large sums from the multibillion-dollar scheme.

It is one of a number of employment agencies that are exploiting loopholes in the $4.7 billion Job Services Australia program, a federal initiative to assist the long-term unemployed find work.

As the scheme rewards agencies that ''broker'', or find, a high volume of jobs for Centrelink recipients, some organisations are falsely claiming they have found jobs that individuals secured for themselves.

The greater the number of jobs the agencies find, the higher the fees they receive and the more likely they are to win future government contracts.

But in the case of CatholicCare, as many as 70 per cent of the jobs it has claimed it ''brokered'' were found by the job seekers.

Advertisement

The Herald interviewed 63 job seekers serviced by Local Employment Training Solutions (LETS), the church's agency, between October 2009 and December 2010 whose job placements were lodged with the Department of Education, Employment and Workplace Relations as brokered.

But 44 of them said they had found the job in question, contradicting CatholicCare's official claims for fees. Many had a long history with the employer that predated their relationship with the agency.

The federal government spent more than $1.5 billion on JSA programs last year.

If even a fraction of the 1800 agency branches around the country engage in similar conduct, taxpayers could be defrauded of millions of dollars.

If an agency finds a job for a poorly skilled job seeker, it can earn more than $2500. But if the job seeker finds the job, the agency may claim only $2025.

In a single month, a CatholicCare employment branch claimed more than $76,000 in brokerage fees related to 43 job seekers.

Last year Max Employment, the largest for-profit player in the industry, raked in more than $167 million from Job Services Australia and turned this into more than $30 million of profit. Similar figures are not available for LETS as the church owns it.

The Herald has also seen evidence that LETS branch management has sometimes encouraged false claims.

According to notes taken during a formal training session in May, management at one western Sydney branch told staff, where possible, not to record on the department's file when a job seeker found their own work. Instead the manager encouraged staff to hide those jobs from the department, with the result that LETS would obtain a higher fee.

Staff were told that a single trusted manager would handle ''found own employment'' jobs and ''broker'' them to the department's software system. Confidential records also indicate LETS has issued thousands of dollars in wage subsidies to employers that do not meet the criteria for such payments.

Wage subsidies are payable only to employers who have a genuine need to train a new staff member, and only where the employee works a minimum number of hours.

But in one case last December, LETS paid a plastics company $2683 in subsidies even though the employer admitted the employee had not worked the requisite number of hours. An internal file note records that the employer conceded the employee had worked at least 35 hours fewer than required.

A separate file on the matter says: ''Despite having confirmed with the production manager at [the company] that the … worker in question did not work enough hours over the first 13 weeks required without acceptable explanation … LETS processed … [the] wage subsidy payment.''

Bernadette Bain, a CatholicCare spokeswoman, said the organisation had ''commissioned a

full independent investigation which is under way'' into the allegations and had informed the government.

''At this stage, there is no evidence of any systemic problem of fraudulent behaviour and we are unable to comment further until the investigation is completed,'' she said.

Industry sources say such breaches are motivated not just by inflated contract fees but by a star rating system used by the department to help determine which agencies will qualify for the next round of contracts.

The shared software system that underpins welfare-to-work initiatives allows brokerage claims to be registered without documentary evidence. The agency is required only to retain a file note with basic details about the placement.

And because of the huge scale of the program, individual agencies are rarely audited by the department.

The privatisation of welfare to work initiatives under the Howard government spawned a profitable industry in competing for a slice of the unemployment market.

A departmental spokesman, Tim Pigot, refused to release information detailing how much the department had recouped in wrongly claimed brokerage fees and declined to answer questions about investigations it has concluded into non-compliance.

''The department is proactive with its internal audit branch responsible for regularly reviewing specific aspects of program management,'' he said.

Loading

Do you know more? investigations@smh.com.au

Correction: In an earlier version of this story, the headline incorrectly said the Tax Office was duped.